ST9905-CS010202TRANSYSTEMS CORP F-":9724061532 Feb 2 '0' 1059 P.01
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C O N S U L T N T S
3010 LBJ FREEWAY, SMITE 990 DALLAS, TEXAS 75234
'FAX COVER SHEET
DATE: February 2, 2001
JOB NO.
2000890
TO: Ken Griffin,
PHONE:
(972) 304 -3679
City of Coppell
FAX:
(972) 304 -3570
FROM Paul Padilla
PHONE:
(972) 280 -9300
TranSystems
FAX:
(972) 280 -9715
RE: Contract Comments from Legal and Insurance,
Bethel Road
CC:
Number of pages including cover sheet: 7
z
Message:
Ken,
Please find the attached briefing from out attorney. I'll give you a call in a few
minutes to discuss.
Thanks
The inform.atio.n contained in this facsimile is privileged and confidential, intended only
for use by the individual named above. if the reader of this message is not the
intended recipient, or the employee or agent responsible to deliver it to the intended
recipient, you are hereby notified that any dissemination, distribution or copying of this
communication is strictly prohibited. If you have received this communication in error,
please notify us immediately by telephone and destroy this facsimile-
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TRANSYSTEMS -CORP Fax:9724061532 Feb 2 '01 10:59 P.02
MF,,MOR,&NDUM
TO: PAUL PADILLA
FROM: KARL KUCKELMA.N
DATE:, JANUARY 25, 2001
RE: CITY OF CopPELL CONSULUNo ENGINEERS CONTRACT
WITNESSET11
The third "WHEREAS" paragraph references detailed Basic Services in Attachment A, and Special
Services in Attachment B. From our conversation it is my understanding there will be no
Attachment B. I do not have a copy of Attachment A and therefore cannot offer any comments
regarding the contents of that attachment. However, the scope of work contained in Attachment A
should be clear and specific prior to signing the Contract. Make certain that the final contract
includes Attachment A in the form to which you have agreed.
The fourth "%MPXAS" paragraph states that the Contract will be administered on behalf of the
city by its City l ngiacer. The second scutenoo provides that TranSystems will &Uy comply with any
and all instructions from the City Engineer. This last sentence of the fourth " WHEREAS" paragraph
y 9hoWd be deleted `in its entirety. As it currently reads, TranSystems would be required to comply
with any and all instructions from the City En imer, regardless of how unreasonable the instrnctioas
may be andregardless ofwhether the instructions go beyond the scope of services. In the altemative,
that last sentence shouid :be modified,to read as follows:
The Engineer shall fully comply with any and all instructions from said City
Engineer with regard to the Basic Services Parts I and 0, and any Additional
Servicos mutually agreed to in writing by the City and the Engineer as praYided in
paragraph I.A. and B., respectively.
1. Scope of Services.
jni�se`nott that under paragraph IA., any additional services "-wasted by the City must be in
wasting in order to obligate the City to pay T=Systerns for such additional services.
I would delete the last sentence of paragraph I.B. It provides that if there is a conflict between the
Contract and any modifications to the Scope of Services set forth in Attachment A, or any Additional
crvict' mtxtua�Iy agreed to 1A, writing by the' City and TranSystem,s, the Contract will govern. The
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Contract sets forth a total maximum fee in paragraph 3,C. As I read the last sentence of paragraph
l .B., T=Systems will not be entitled to additional payment$ for any modifications to the Scope of
Services set forth in Attachment A, or any Additional Services mutually agreed to in writing by the
City and TranSystems, beyond that set forth as the total maximum fee in paragraph 3.C.
2. Progre s Schedule.
,Attachment A, Scope of Services, and Attachment D, Projoct Schedule, are referred to in this
paragraph. Attachments B and C arc not referenced in this paragraph or any other part of the
Contract-
Please note the time requirements for making submittals to the City, and the content of those
submittals, as specified in paragraph 2.
3. compensation.
Paragraphs5' 3.A. and 3.8. refer to the fees to be charged for Basic Services Parts I and 11, but there
are no dollar figures inserted in those areas. I do not ixtow what Basic Services are to be provided
as Part I and Part H, so it is difficult for me to determine if it is possible to segregate the portion of
the total maximum fee identified in Paragraph 3.C. as Part I and Part II. I will leave this for you to
decido ifsuch a segregation can be made. I am always concerned when a blank is left on a contract,
particularlyundera "Compensation" category. It would be advantageousto have adollarbreakdown
for Part I and for Part II because if there are modifications to the Basic Services Part I which
necessitate a fee Change, those Basic Services and modifications to Basic Services can be kept
distinct from the fees for the Basic Services for Part 11.
Paragraph 3.E. provides that the City will only make a maximum of one payment a month. to
TmaSystems, but does not provide a specific time (e.g., within 30 days) within which the City must
pay`TranSystems other then to state that the City shall endeavor to pay "promptly" Please note that
unlike other contractual a=gements, TranSystetns will not be able to receive interest on past due
amounts from the City.
b.' lriject e ' cra6les.
-The oopy'bf_l Contract I received from Susan Russell has crossed out every sentence under
Paragraph 5 after the first sentence. I do not know if those were her cross -outs or yours. In any
event, 11 4"v' torntyient regarding those cross -outs.
7. Proj etgr ,Control.
Please'note the timing of the perforramce of services: nothing can be done until the City Engineer
issues a Svritten Xotice to, Proceed. Under Paragraph 2, within ten days after receiving the Notice
to Probeed;' TranSyste ns must submit to the City a Schedule of Services as more fully set forth in
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Famgraph 2, Thereafter, TranSystems cannot perform any services until receiving written instruction
from the City to proceed. Paragraph 7 provides that any services performed after the submittals
required by Paragraph 2 and before the City provides written instructions to proceed will not be
compcusated.
9, DjjqUt
I do not like this paragraph as worded.
The first sentence states that the City Engineer will be the referee in any dispute between
TranSystems and the City Engineer. The first sentence should be deleted.
The second sentence of Paragraph 9 is fine as worded.
The third sentence of Paragraph 9 should be changed to read. "The Engineer or the City Engineer
may present unresolved disputes arising under the terms of this Contract to the City Manager or
designee."
The last three sentences of Paragraph 9 should be deleted. The first of those three sentences
indicates that the decision of the City Manager shall be final and binding. Therefore, if there is a
a dispute between TrairS�►stems and the City (�.g., increased fees relating to additional services), the
CityManager will decide the dispute, and the City Manager's decisionis binding upon TrauSystems,
regar4less of how egregious that decision is. The affect of the second of those three sentences is that
if TranSystems is not happy with the City Manager's decision regarding a dispute, TranSystems is
in breach of the Contract, and the City would therefore have sufficient grounds to terminate the
Contract: 'Tne`th' d of those three sentences provides that if the City does terminate the Contract
because, T=Systems Corporation is unhappy with the City Manager s decision regarding a dispute,
TranSysterus must pay for any increased cost arising i'rom the termination. This could include the
increased cost of hiring another f= to complete the project.
I recommend insisting upon the deletion of the last three sentences of Paragraph 9, and in their stand,
inserting2the falla�wing;
In the event the City and the Engiaeer are unable to resolve a dispute regarding this
ContdCt, the City and the Euginaer may pursve such other avenues and remedies
as are available to them at law' or in equity.
11. I ilsbj1i ,
7'he,fizst sentGnge Qf Paragraph 1 l provides that simply because the City approves any of the work
performed 'by Tran$ystems does not release TranSystems for any defect, error, or omission in
Tran$yst6ms' work. I, recommend that the word "defect" be replaced with the word `negligent"
Consistent with Susan Russell's recdmm ondation.
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I agree with Susan Russell's changes to the next soattace which should read as fellows:
Engineer shall indemnify City for damages resulting from such negligent errors or
omissions and shall secure, pay for and maintain in force during the term of this
Contract sufficient errors and Qtniasioub insurance in the amount of $250,000 single
limit, with certificates evidencing such coverage to be provided to the City_ The
redesign of any work found to be defective as the result of negligence of Engineer
shall be the sole responsibility and expense of the Engineer. Any work constructed,
found to be in error because of the Engineer's negligence, shall be removed,
replaced, corrected, or otherwise resolved at the sole responsibility and expense of
the Engineer.
I do not believe the modifications as recommended are so significant that the City would object, I
would inform the City that these two modifications were mandated by TranSystems' insurer to
increase the likelihood of coverage under TranSysten s' errors and omissions policy. I would not
snake any statements which could be construed to guarantee coverage under TrIaSystems' policy.
The last sentence of Paragraph 11 should be deleted in its entirety. The "express negligence rind'
adopted by the Texas Supreme Co'uit provides that if a party agrees to pay another party for the other
party's negligence, that must beset forth clearly and conspicuously in the contract. If it is not clearly
and coaspieuousiy set forth in the contract, the Texas courts will not require one party to pay another
party for the of er.party's negligence. The express negligence rule is not applicable to Paragraph 11
because T*Systems' indemnity to the City is orily applicable if such damages were caused by
TranSystems' conduct, not by the City's conduct. TranSystems is not agreeing to indemnify the City
for the City's own negligence.. Leaving the last sentence of Paragraph I I in the Contract runs the
risk that a court may construe Paragraph 11 to have intended for TranSystems to indemnify the City
for the City's own negligence even though the express language does not so provide.
iZ. �pdemnlfieatian.
Paragraph 12 should be changed to read as follows:
{
nneer shall indemnify and hold harmless the City of Coppell, its officers, and
employees from any loss, damage, or expense, including reasonable attorney's fees,
on, account of damage to property and injuries, including death, to all persons,
including employees of Engineer, to the extent caused by any negligent errors or
omissions on the part of Engineer, its employees, consultants, or subcontractors for
whom Eng lnFv r is legally liabl.e, in performance of this Contract, or for any breach
o� ,aziy_ obligation under this Contract. it is further understood that it is not the
iritention of the parties hereto to create liability for the benefit of third parties, but
that thi' agreement shall bo solely fof the benefit of the parties hereto and shall not
create pr grant any rights, contractual or otherwise, to any persona or entity-
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The last sentence of Paragraph 12 relating to the express negligence rule should be deleted in its
entirety for the same reasons it should be deleted from the last sentence of Paragraph 11.
13. ngla, s and Failure 12 Per orm.
Except for delays associated with review periods by the City in excess of the agreed Project
Schedule, TrauSystems will be in breach of the Contract if the services sue not completed within tbx
agreed Project Schedule. As Paragraph 13 is written, this 'Would occur evcn if the delays were
beyond the control of TranSystems_ If you believe there is somz likelihood that a delay beyond
TranSystems' control will cause the services of the Contract to be completed outside the agreed
Project Schedule, please let me know and we can address whether Paragraph 13 should be modified.
15.
Make sure your files docmcnt that your people are licensed or certified as required by law. This
could become an issue is the avert of a claim at a later date.
17. QBMWhip
This paragraph assigns any guthorship rights to TranSystems' work to the City. Without having the
Scope of Services, I cannot determine if T=Systems' work on this Project contains proprietary
information: which TranSystems warts to protect from the City's future use.
Without knowing the Scope of Services, my only concern with Paragraph 17 is liability arising out
of the City's piture use of TrWaSystems' designs and work product under this Contract for a future
project in which TranSystems is notinvolved Consequently, I would include the following sentence
after, the samenae, "Copies may be retained by Engineer":
'shall indemnify, hold harmless, and defend Engineer, its officers, and
employees, from Pay lose, damage, or expense, including reasonable attorney's fees,
resulting from or connected with any future use by the City of Engineer's designs
and work product under this Contract.
11. Compliance with ,Laws.
I agree fat tl}� wprd "applictible" should be inserted after the word "all" and the word "Federal" in
fire first line`o'`thc first sentence of Paragraph 22.
CONCLUSION
I have included Susan Russell's suggested changes on the indemnity language in an attempt to make
*4 langgsge; insurable under your professional liability policy, but I have not construed your policy
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„, „
to determine if its fact Susan's changes will makc each scenario for which indemnity will be required
by T=Systems is insurable under your professian,al liability policy. if you bave any questions
regarding this, Y would follow through with Susan Russell.
Y have attached to this Memorandum each of tho paragraphs Y recommend be modified so that you
can submit this to the City without showing them my comments.
op- 100%8109.1 6